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How much of John Maynard Keynes can we find in Franco Modigliani?

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  • Luigi L. Pasinetti

    (Università Cattolica del Sacro Cuore, Istituto di teoria economica e metodi quantitativi, Milano (Italy))

Abstract

Franco Modigliani's first published paper became one of the basic documents of modern Keynesian economics. In it he formalized the model (or at least one model) implicit in The General Theory. Modigliani argued that the characteristic Keynesian conclusions rest fundamentally on the (realistic) rigidity of nominal wages. In particular, he showed that if wages and prices were flexible, the liquidity preference theory of money could not generate persistent involuntary unemployment, but if wages were rigid, even the quantity theory of money could do so. Sixty years laterModigliani returned to a statement of "the Keynesian gospel" and proposed essentially the same interpretation. This paper reviews and discusses this approach to macroeconomics, with some reference to its implications for policy.

Suggested Citation

  • Luigi L. Pasinetti, 2005. "How much of John Maynard Keynes can we find in Franco Modigliani?," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 58(233-234), pages 21-39.
    • Handle: RePEc:psl:bnlaqr:2005:24
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9841/9726
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    References listed on IDEAS

    as
    1. Joan Robinson, 1962. "Essays in the Theory of Economic Growth," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-00626-7, December.
    2. Franco Modigliani, 1977. "The monetarist controversy; or, should we forsake stabilization policies?," Economic Review, Federal Reserve Bank of San Francisco, issue Spr suppl, pages 27-46.
    3. Hicks, John R [Sir], 1975. "Revival of Political Economy: The Old and the New," The Economic Record, The Economic Society of Australia, vol. 51(135), pages 365-367, September.
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    Cited by:

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    2. Emiliano Brancaccio & Fabiana De Cristofaro, 2020. "Inside the IMF Òmea culpaÓ: A panel analysis on growth forecast errors and Keynesian multipliers in Europe," PSL Quarterly Review, Economia civile, vol. 73(294), pages 225-239.
    3. Rancan, Antonella, 2012. "Modigliani's 1944 Wage Rigidity Assumption and the Construction of the Neoclassical Synthesis," Economics & Statistics Discussion Papers esdp12069, University of Molise, Department of Economics.

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    More about this item

    Keywords

    Money;

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals

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